Entries in Peugeot
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PSA Peugeot Citroen(NEW YORK) -- With gas in the United States averaging $3.31 per gallon this week and the average car getting about 27 mpg in regular driving, it may feel like you're handing over your life savings every time you go fill up the tank.

Some gas-electric hybrids can do better than 50 mpg, but not a lot of people own them. And though you spend less on gas, you generally spend more up front on the price of the car.

But what if someone offered you a car that could get up to 117 mpg in city driving and would cost about $1,500 less than typical hybrids?

Peugeot Citroen, the French automaker, has now shown off a prototype for such a car and claims on its website that it could start selling air-hybrid cars in Europe by 2016.

The company, according to European news reports, says that on local streets, the cars would mostly run on compressed air, cutting gasoline use -- and costs -- by as much as 80 percent. There would be a sturdy tank of compressed air in the floor or trunk, recharged by the engine or brakes. The technology would start in existing subcompact models, the company said, but soon expand to include vehicles of all sizes.

“We are not talking about weird and wacky machines,” a company spokesman was quoted as saying. “These are going to be in everyday cars.”

Peugeot Citroen says it took on “the challenge of creating an environmentally friendly vehicle,” and expects it would also save its customers money. It got some backing from the French government, which, like the U.S. government, is pushing automakers to get better fuel efficiency.

But will it be viable? Peugeot and Citroen, which joined forces in the 1970s, both pulled out of the U.S. market decades ago, and have been losing market share in Europe. It’s important for them to look innovative.

LIONEL BONAVENTURE/AFP/Getty Images(WASHINGTON) -- Attention U.S. taxpayers: You now own a piece of a French car company that is drowning in red ink.

In a move little noticed outside of the business pages, General Motors last week bought more than $400 million in shares of PSA Peugeot Citroen -- a 7 percent stake in the company.

Because U.S. taxpayers still own roughly one quarter of GM, they now own a piece of Peugeot.

Peugeot can undoubtedly use the cash. Last year, Peugeot’s auto making division lost $123 million. And on March 1 -- just a day after the deal with GM was announced -- Moody’s downgraded Peugeot’s credit rating to junk status with a negative outlook, citing “severe deterioration” of its finances.

In other words, General Motors essentially just dumped more than $400 million of taxpayer assets on junk bonds.

GM has said the deal is designed to give GM access to Peugeot’s expertise in small car and hybrid vehicle technology and ultimately allow both GM and Peugeot to save money by pooling their resources. But auto industry analysts find the deal mystifying.

An analysis by auto industry consultants IHS said it is “somewhat baffling that GM is willing to get involved in an alliance that it frankly does not need for size or complexity, while still avoiding any public plan to rationalize its European production, cut costs, or deal with labour rates.”

The deal will allow the Peugeot family to reduce its share of the family business. The family, which Forbes estimated to be worth more than $2 billion, still owns about 30 percent of the company. The Peugeots declined the opportunity to buy a piece of GM.﻿